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1 Medical Defence Union response to consultation on European Commission s proposals for Directive on the application of patients rights in cross-border healthcare Introduction 1. The Medical Defence Union (MDU) is the UK s leading provider of medicolegal services. Our members are over half the UK s doctors in hospital and general practice, and over a third of the UK s dentists. Established in 1885, we concentrate on doctor and dentist members practising in the UK and Ireland, though until the 1990s we used to provide benefits of membership in a great number of countries worldwide. Since 2000 we have provided UK medical members who are not indemnified by the NHS with indemnity insurance for professional negligence claims arising out of their treatment of patients in the primary care and independent sectors. The draft directive 2. Given our medico-legal remit, we do not have any comments to make on the specific questions raised in the consultation document which relate generally to the provision of healthcare itself, but we would like to make comments about the provision of indemnity. 3. Our interest in the draft EU directive on cross-border healthcare arises out of its provisions in respect of indemnity for clinical negligence claims and we would like to comment on certain provisions dealing with this. Article 5 1(d) requires provider states to ensure that patients have a means of making complaints and are guaranteed remedies and compensation when they suffer harm arising from the healthcare they receive. Article 5 1 (e) says that provider states must also ensure there are in place systems of professional liability insurance or a guarantee or similar arrangement, which are equivalent or essentially comparable as regards their purpose and which are appropriate to the nature and the extent of the risk for treatment in the provider state. 4. We understand this to mean that each provider state will need to ensure indemnity arrangements are in place to cover healthcare provided in that

2 Page 2 MDU response to consultation on EC proposals for a Directive on the application of crossborder territory, to ensure patients from other member states will be compensated if they are negligently harmed by such treatment. Article 5 1(e) would allow indemnity to be provided by state schemes and insurance, which are the only means of indemnity in most member states; but we are concerned it could also be interpreted as allowing discretionary indemnity to be used for clinical negligence claims. 5. It is important to remember that patients who may need to rely upon compensation if they are harmed by negligence are not in a position to make the decision about the types of indemnity that are available to the practitioner treating them, in their state. They are reliant on their state to protect their interests and to ensure that there are adequate provisions for indemnity, be it a state indemnity or individual indemnity held by healthcare professionals. We believe, therefore, in the interests of protecting patients that there should be an EU-wide requirement for mandatory, regulated insurance, or state systems providing equal certainty, in respect of liability for clinical negligence claims. There is no room for any type of unregulated indemnity. All patients who are negligently harmed as a result of healthcare must be confident that they will receive compensation, no matter in which state their treatment has been provided. 6. There is a mix of indemnity provision throughout the EU and EU candidate countries, depending on whether healthcare is provided by the state, or the independent sector, or both. Insurance is mandatory in the majority of states, where there is either a requirement for the healthcare institutions or the doctors they employ to be insured, or both. 7. In Austria, Germany, Latvia, France and the Slovak Republic it is mandatory for doctors to have insurance. In the Czech Republic, Finland, Hungary, Poland and Spain, there is a requirement for healthcare institutions and individual doctors to be insured. In Lithuania and Portugal, there is a requirement for institutions to be insured and it is advised for doctors because the institution can claim back from them any

3 Page 3 MDU response to consultation on EC proposals for a Directive on the application of crossborder compensation payments it makes on their behalf. In Italy and Estonia, insurance is voluntary. 8. In a few states there is no requirement for insurance for doctors (Greece, Luxemburg & Slovenia). 9. In Denmark and the Netherlands there is a state indemnity scheme and individual doctors do not need to be insured, but in Sweden, where there is also a state indemnity, there is an additional requirement that doctors practising in the private sector are insured, either personally or through the service companies in which they work. 10. A minority of states allow discretionary indemnity the UK, Ireland and possibly Malta. 11. If discretionary indemnity was considered acceptable for cross-border healthcare, it would not meet the expectations of the majority of EU patients who expect certainty of compensation either because there is state indemnity, or the clinical institutions and individual healthcare providers are insured, or a combination of any of these. 12. This could give rise to difficulties: for example, a German patient who was treated in the UK and negligently harmed by a doctor who was reliant only on discretionary indemnity might not be compensated if the indemnifier decided not assist the doctor with the claim. Of course, a German patient who had been treated and harmed in Germany by an insured doctor would have received insured compensation. 13. There is a real risk with discretionary indemnity that doctors or dentists may not be assisted and that patients will go uncompensated. The MDU is aware of a number of cases, in the UK and elsewhere in which doctors and dentists were not assisted by medical defence organisations and patients were left uncompensated.

4 Page 4 MDU response to consultation on EC proposals for a Directive on the application of crossborder 14. In the UK, while discretionary indemnity is currently provided to some doctors and dentists, many other healthcare professionals have to be insured. For example, under new regulations that came into force on 3 November 2008 (The Mental Capacity (Deprivation of Liberty: Standard Authorisations, Assessments and Ordinary Residence) Regulations 2008), there is a requirement for all healthcare professionals (including doctors) who undertake assessments of mental capacity under these regulations, to be insured in respect of any of the liabilities that might arise in making such assessments and that they provide evidence to the supervisory body that they have such insurance. Physiotherapists, chiropractors, osteopaths and optometrists also have to be insured. This could lead to a further anomaly where a German patient who sought treatment in the UK from an insured healthcare professional, such as a physiotherapist or an optometrist, would be sure of compensation if he or she was negligently harmed because these and other healthcare professionals are required to be insured. 15. It is inconsistent that patients would be subject to different levels of certainty in respect of compensation, depending upon which healthcare professional treated them or, if a doctor or dentist, depending upon which medical defence organisation they belonged to. We believe that any indemnity requirement should make it clear that the indemnity must provide consistent cover so that patients 16. have the same guarantee they will receive compensation, no matter which healthcare professional they consult in another member state. 17. It is in the interests of patients and healthcare professionals in all member states, therefore, that the draft directive is amended so it is clear that provider states are required to ensure compensation for claims in respect of treatment provided in their territory will be available only through state indemnity and/or indemnity insurance underwritten by regulated insurance companies.

5 Page 5 MDU response to consultation on EC proposals for a Directive on the application of crossborder Insurance v discretionary indemnity 18. Most UK doctors who are not NHS-indemnified arrange their indemnity with one of the three medical defence organisations (MDOs), though a few deal direct with specialist insurers. As an MDO, the MDU is alone in providing members, as part of their benefits of membership, with an insurance policy (currently co-underwritten by SCOR Insurance (UK) Limited and International Insurance Company of Hannover Limited), in respect of claims for clinical negligence. The other MDOs provide only discretionary indemnity to individual members in respect of such claims. 19. With discretionary indemnity, the decision to indemnify or not can only be made when practitioners present the indemnifier with the facts of the case for which they are seeking help. MDOs cannot guarantee they will assist members with clinical negligence claims, as to do so would be to carry on unregulated insurance business, a criminal offence. 20. It is a requirement in most developed countries that practising doctors and dentists have adequate professional indemnity insurance in order to protect patients. For example, in the early 2000s in Australia a discretionary indemnifier went into provisional liquidation and the Government responded by passing legislation so that discretionary indemnity is now unlawful. Medical indemnity can only be offered by way of a contract of insurance by an authorised insurer, and applying the standards of prudential regulation which applied to general insurers to medical insurers, in particular solvency and capital requirements. 21. In the UK, insurance is regulated and provides a contractual right to assistance, subject only to the terms of the policy. Discretionary indemnity is unregulated and provides only the right to request assistance. We believe this is an important distinction as far as the interests of patients and the public are concerned, because regulation provides a high degree of consumer protection that is not available with unregulated financial services.

6 Page 6 MDU response to consultation on EC proposals for a Directive on the application of crossborder 22. UK discretionary organisations have been known to refuse indemnity when asked by members for assistance with clinical negligence claims. An insurance policyholder who is refused assistance is entitled to an explanation for that refusal and can seek redress through the Financial Ombudsman Service and the courts/arbitration, where a judge/arbitrator will decide if the matter is a breach of contract. A discretionary organisation is not obliged to give any reasons for the refusal and, as there is no contract of indemnity, doctors reliant on discretionary indemnity cannot seek redress for breach of contract and have limited legal options for redress. Insurance is also supported by the Financial Services Compensation Scheme which exists to pay claims in the event that an insurer or other provider of financial services fails. Discretionary providers do not come within this scheme and their members and their patients do not have this protection. 23. A further protection for patients where practitioners are insured is the Third Party (Rights Against Insurers) Act 1930 that provides a patient with rights against a doctor s insurer in the event that the doctor is bankrupt or dies with an insolvent estate. No such rights exist with discretionary indemnity. Conclusion 24. When damages are awarded in negligence cases, it is imperative that patients know they will receive the compensation due to them. UK citizens are not allowed to insure their cars on a discretionary basis, and doctors and patients should not be allowed to rely on discretionary indemnity for clinical negligence claims. 25. In providing for cross-border healthcare, we believe member states will wish to ensure that patients can expect essentially uniform protection wherever in the EU they receive healthcare. The UK (and Ireland) are the only member states where discretionary indemnity is still available and we believe this is neither adequate nor appropriate.

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